CFE Analysis | Fed

Q&A about Fed portfolio normalization

The best way to predict how the FOMC will react to evolving economic conditions, we at the CFE have been arguing, is to listen almost exclusively to communication on behalf of the consensus, and then to, as best as possible, take that communication at face value. As we’ve documented, this approach has had an excellent […]

CFE Analysis | Fed

What will the Fed do? March 2017 edition

After the December FOMC, I posted that I was sticking with a baseline, near-term-rosy Trump outlook, in which a robust economy is greeted by a Fed happily rising rates three or more times. Then as now, I had no great confidence that the rosy scenario would continue to unfold, but forecasting 3 or more rate […]

CFE Analysis | Macro

Populist policies cause immediate misery. Or not.

As a professional economist, I am quite certain that most readers of this blog could cancel their insurance policies and spend the savings on a pleasant party. And with any luck, the good times could go on for, as the Fed would say, a considerable period. The Wall Street Journal, a few weeks back, described […]

CFE Analysis | Macro

Surely we're behind some curve!

Let us take a moment explicitly to place the CFE in the pro-facts camp. We are honored to work at Johns Hopkins University, the first modern research university in the U.S., founded on a hard-nosed commitment to facts and with a mission to discover facts and to teach how to deploy them constructively. Ok, got […]

CFE Analysis | Fed

Rosy scenarios, Monetary policy, and Trump

Another year of well-disguised, steady predictability in Fed policy is in the books, and the FOMC hit the trifecta at the December meeting. The Fed did what policymakers had clearly indicated they would do; the FOMC said what any reasonable policymaking body would say under these circumstances; and the dots, as usual, created a carnival […]

CFE Analysis | Fed

What will the Fed do? Dec. 2016 edition

Like most folks who focus on such things, I expect a 25 basis point increase in the federal funds rate target range at the December FOMC meeting. Since mid-August, I’ve said that under the Fed’s consistent MO, if the economy did not break strongly in either way, we’d get one rate rise this year—most likely […]

CFE Analysis | Macro

A Trump Tantrum?

The pre-election views that a Trump victory would mean a market route proved way off the mark. Instead, as of early December, the stock market and bond yields have jumped and credit spreads have tightened. The market moves, according to a popular storyline, reflect bets on a rosy Trump scenario in which Trumpist policies—whatever their […]

CFE Analysis

Central banks, who needs 'em?

The Swedish Riksbank just published a volume on Rethinking the Central Bank Mandate. The Riksbank, the world’s first central bank, is now working to engage the public in a thoroughgoing examination of what central banks should be doing today and in the future. We could use a similarly thoughtful discussion here in the U.S., but […]

CFE Analysis | Fed

Understanding Fedspeak

Yesterday, CFE joined the Hutchins Center at Brookings in hosting a meeting on Fed communication. We had a vigorous discussion among an impressive group of current and former Fed officials: Ben Bernanke, Alan Blinder, Don Kohn, and Jay Powell. The Fed’s listening audience was represented by the press, bloggers, and Fed watchers: Tim Duy, Ylan […]

CFE Analysis | Fed

What will the Fed Do? (Nov. 2016 FOMC edition)

I hate to pull your attention away an edifying display of democracy in all its glory, so this will be brief. My prediction for today’s FOMC meeting is slightly different from what I stated before the January FOMC, but utterly unchanged from before Chair Yellen’s August Jackson Hole speech. For about a year now, I’ve […]

CFE Analysis | Fed

Six Degrees of Separation in Practice

In a recent Financial Times article, Faust notes: [A] growing chorus of voices as diverse as Donald Trump, the Republican candidate for the presidency, and Martin Feldstein, former chief economic adviser to president Ronald Reagan, and now a professor at Harvard, are demanding that the Federal Reserve aggressively tighten monetary policy. Mr Trump’s reasoning is […]

CFE Analysis | Fed

What will the Fed do? (Sept. FOMC update)

After last night’s post, I got emails accusing me of being a two-handed economist. While anatomically correct, I take the point, so I’ll add this note saying that my view of likely policy is where it was in the Jackson Hole update. A quick summary: I’ve been arguing that the consensus of the FOMC, as […]